Making It Happen
Create systems for budgeting, receivables, and payables to establish how healthy the business is in a financial sense. Create a cash flow statement.
Don’t perform work for customers that can’t be relied on to pay promptly. Share with all customers the terms of payment, including any incentives and penalties.
Keep a close eye on both payments the business will be required to make and payments that could be delayed or deferred because they are not essential to current business operations.
When the business is cash negative, don’t panic. As long as the business has predictable, reliable income from customers in the near future, a manager can access lines of credit—if he has been wise enough to establish those before they become a critical need. And when income arrives, such short-term debt should be paid down immediately.
1 “Small business economic confidence continues to slide. 2 in 3 small business owners rate economy as poor; 3 in 4 see it getting worse.” Discover Financial Services Small Business Watch, November 2008: www.discovercard.com/business/watch/2008/november.html
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